EXPLANATORY STATEMENT No 143
ISSUED BY THE AUTHORITY OF THE MINISTER FOR FINANCE
Subject - Audit Act 1901
Finance Regulations (Amendment)
Finance (Overseas) Regulations (Amendment)
Subsection 71(1) of the Audit Act 1901 (the Act) provides that the Governor-General may make regulations (not inconsistent with the provisions of the Act) for carrying out the provisions of the Act.
Section 63 of the Act provides that the regulations may make provision for and in relation to financial administration by Departments outside Australia.
The attached Statutory Rules amend the Finance Regulations and the Finance (Overseas) Regulations made pursuant to subsection 71(1) and section 63.
The Statutory Rules:-
(a) amend Finance Regulation 6A as a consequence of the amendment made to the definition of “prescribed authority” in section 2 of the Act by the Statute Law (Miscellaneous Provisions) Act 1987 (the 1987 Act); which extended the definition to allow branches of the Public Service to be prescribed;
(b) amend various Finance Regulations and Finance (Overseas) Regulations as a consequence of the recommendation by the Efficiency Scrutiny on the Processing of Accounts (the Efficiency Scrutiny) that all legislative impediments to the utilization of computer-based systems for the processing of accounts should be eliminated (the Efficiency Scrutiny was established by the Government, as one of the Block Scrutinies, to examine all aspects of accounts processing with the object of ensuring that the most efficient processes were introduced);
(c) amend various Finance Regulations and Finance (Overseas) Regulations as a consequence of the amendment made to section 34 of the Act by the 1987 Act (formerly, that section provided that a Certifying Officer must certify in writing that a payment might properly be made. The amendment provides that, instead of giving a certificate, a Certifying Officer must indicate, in a manner approved in writing by the
Minister for Finance, that payment may properly be made);
(d) amend Finance Regulation 78 as a consequence of the introduction of pre-paid travel for officers within Australia;
(e) amend Finance Regulation 90, by replacing “Warrant Authority” with “Funds Allocation Authority”, as a consequence of amendments made to sections 32 and 33 of the Act by the 1987 Act;
(f) amend Finance Regulation 131, which previously required that officers who dealt with public moneys held complete copies of the Act and its subsidiary legislation, to permit officers to hold only those parts of the Act and its subsidiary legislation that are relevant to their particular duties; and
(g) amend Finance Regulation 133 to increase the penalty for breaching the Regulations from $10 to $500 in line with an amendment to section 71 of the Act made by the Audit Amendment Act 1988.
Details of the above amendments are shown in Attachment A (Amendments to the Finance Regulations) and Attachment B (Amendments to the Finance (Overseas) Regulations.
ATTACHMENT A
AMENDMENTS TO THE FINANCE REGULATIONS
Regulation 1
The amendments in paragraphs (a) and (b) of regulation 1 of the Statutory Rules are as a consequence of those described in regulation 2.
Paragraph (c) amends the definition of “Certifying Officer” in Finance Regulation 4. Previously that definition provided that “Certifying Officer” meant a person appointed under subsection 34(2) of the Act to certify that payments may properly be made.
The amendment to the definition reflects the amendment to section 34 made in the 1987 Act (the amendment to section 34).
Regulation 2
Regulation 2 of the Statutory Rules repeals and replaces Finance Regulation 6A. This regulation lists those bodies which are prescribed authorities for the purposes of the Act and which, as prescribed authorities, come under the definition of “Department” in section 2 of the Act.
As a prescribed authority a body operates, in matters of financial administration, independently of the Department of the Minister who administers the authority; if not prescribed, it would operate as a branch of that Minister’s Department.
The definition of “prescribed authority” in section 2 of the Act was amended by the 1987 Act. The amendment extended the meaning of the term to cover branches of the Public Service, or classes of branches, which are prescribed for the purposes of the definition; previously only corporate or unincorporated bodies could be prescribed. In addition, the amendment to the Act provided for the prescription of bodies which were constituted by legislation (eg the Inter-State Commission); previously only bodies established by legislation could be prescribed.
Prior to the 1987 Act amendments certain branches of the Public Service could not become prescribed authorities. To ensure that these branches were Departments for the purposes of the regulations, they were included in the definition of “Department” in Finance Regulation 4. The branches involved were those in relation to which the
following statutory office holders have the powers of a Departmental Secretary:-
Auditor-General
Commissioner for Superannuation
Commissioner of Taxation
Commonwealth Ombudsman
President of the Inter-State Commission
Supervising Scientist for the Alligator Rivers Region
The amendment to Finance Regulation 6A will include the above branches as prescribed authorities.
Also, the following new entities have been included-
Automotive Industry Authority
Insurance and Superannuation Commission
National Capital Planning Authority
Office of the Parliamentary Counsel
Public Service Commissioner.
Textiles, Clothing and Footwear Development Authority
These entities were established, respectively, by the following Acts:-
Automotive Industry Authority Act 1984
Insurance and Superannuation Commissioner Act 1987
Australian Capital Territory (Planning and Land Management) Act 1988
Parliamentary Counsel Act 1970
Administrative Arrangements Act 1987
Textiles, Clothing and Footwear Development Authority Act 1988
In view of the functions and duties of each of these entities it is appropriate that they operate independently in matters of financial administration.
The references in Finance Regulation 6A to the Schools Commission and the Curriculum Development Centre have been omitted. These bodies were abolished by the Employment, Education and Training Act 1988.
Regulation 3
Regulation 3 of the Statutory Rules amends Finance Regulation 45 which provides for a Certifying Officer to undertake certain checks before he or she certifies that a payment may properly be made.
Previously, the regulation set out procedures which were appropriate to an accounts processing system which relied on
hard-copies being produced and, in particular, provided that:-
(a) where a voucher was missing, the claim had to be supported by a certificate given by the Secretary of the Department or an authorised officer certifying, inter-alia, that it was not possible to obtain the voucher and, in the case of supplies, that the claim was a reasonable charge against the public funds; and
(b) where the claim was for supplies that it was supported by a certificate by the Secretary of the Department or an authorised officer certifying that the requirements of the agreement relating to the supplies that were to be satisfied to entitle the claimant to payment had been satisfied.
Those provisions impeded the full use of computer-based systems of accounts processing and thus an amendment to regulation 45 was made to give effect to the Efficiency Scrutiny recommendation.
The requirement for the first of the above certificates was removed. The certificate served little purpose, particularly when given by a Certifying Officer (in practice Departmental Secretaries authorised Certifying Officers to give the certificate themselves), because in deciding whether or not a payment may properly be made it could be expected that a Certifying Officer would consider the need for documentary evidence.
However, the second of the above certificates has been replaced with the requirement that a Certifying Officer may indicate that a payment may properly be made only after having taken such steps as are reasonably practicable to establish compliance with the terms of the contract, he or she is satisfied that those requirements have been complied with.
The provision has to be in this form because it is not always possible or practicable for a Certifying Officer to verify the provisions of a contract at first hand. For example, the contract may deal with technical matters or the action necessary to establish the facts is impracticable in the circumstances. What steps are practicable will of course depend on the particular circumstances, however, the provision will allow Certifying Officers to, for example, rely on the advice of an expert or use other indirect means of satisfying themselves of compliance.
Regulations 4 and 6
Regulations 4 and 6 of the Statutory Rules amend Finance Regulations 45A and 56 which deal, respectively, with the certification of those classes of claims for which simplified checking is appropriate and with periodic or progress payments under contracts. Previously, both regulations referred to the written certificates required of Certifying Officers before the amendment of section 34 and provided for certain other written certificates to be given as well.
The amendments to both regulations reflect the amendment to section 34 and provide for the other certificates to be given either in writing, or in such other manner as is approved by the Secretary of the particular Department. The latter amendments are made as a consequence of the Efficiency Scrutiny recommendation
In addition, it is considered that the simplified procedures for checking claims associated with paragraph 45(3)(f) should apply to all claims for less than $1000 and not only to claims for supplies, there being no justification for the current distinction. Accordingly, the reference to supplies has been omitted from that paragraph.
Regulations 5, 7, 8 and 9
Regulations 5, 7, 8 and 9 of the Statutory Rules repeal Finance Regulations 54, 56A, 56AA, 56B and subregulations 59(1) and 60(1) which provided, respectively, that:-
• accounts for general expenses should be in accordance with Form 12;
• a Register of Accounts should be kept;
• an authorised officer should prepare and forward to the Certifying Officer statements of all variations of pay, allowances etc;
• a fortnightly statement should be prepared, in accordance with Form 28, of variations of pay;
• accounts for travelling allowance should be in accordance with Form 12A; and
• petty expenditure should be in accordance with Form 16.
These provisions required either the use of specific forms or for written statements to be given on the various matters
dealt with and thus impeded the use of computer-based systems of processing.
The repeal of the regulations gives effect to the Efficiency Scrutiny recommendation.
Regulation 10
Regulation 10 of the Statutory Rules amends Finance Regulation 61 which provided that refunds of revenue or from the Trust Fund should be made on Form 17 and that certificates were to be given certifying either that the amount had been received or that the claim for refund had been examined and the amount was properly payable.
The amendment to regulation 61-
(a) removed the requirement for refunds of revenue to be made on Form 17; and
(b) amended subregulations (2) and (3) to provide for the necessary certificates to be given either in writing or in such other manner as is approved by the Secretary of the particular Department.
These amendments, which facilitate the use of computer-based systems of processing, were proposed as a consequence of the Efficiency Scrutiny recommendation.
Regulation 11
Regulation 11 of the Statutory Rules repeals Finance Regulations 63A, 64, 65, 71 and 77. These regulations required, respectively, that:-
• pension registers were to be kept in accordance with Form 26;
• duplicate accounts were to be prepared only when the original account had been lost or destroyed;
• certified accounts were to be forwarded to the Authorising Officer;
• authorized accounts were to be forwarded to the Paymaster; and
• for an Authorising Officer to keep a register of advances.
Each of these regulations impeded the full use of computer-based systems and thus they were repealed in line with the Efficiency Scrutiny recommendation.
Regulation 12
Regulation 12 of the Statutory Rules amends Finance Regulation 78 which deals with the adjustment of advances. Paragraph 78(3)(f) required that advances for travelling allowances or expenses incurred within Australia should be adjusted within 14 days of the completion of travel.
New procedures have been introduced for travel within Australia which do not involve the payment of advances to persons travelling; travelling allowance is now an entitlement and as such is not regarded as an advance that has to be recorded and subsequently adjusted. Thus, paragraph 78(3)(f) was redundant and has been repealed.
Regulation 13
Regulation 13 of the Statutory Rules amends Finance Regulation 90 consequent upon amendments made to the Act by the 1987 Act. Those amendments replaced the requirement for the Governor-General to issue Warrant before moneys could be spent from an appropriation, with a requirement that the Minister for Finance allocate appropriated funds before expenditure may take place.
The means by which Departments were advised of the allocation of funds was by Warrant Authority issued by the Secretary to the Department of Finance pursuant to Finance Regulation 90. The term “Warrant Authority” has been replaced by “Funds Allocation Authority” to reflect the changes to the Act.
Regulation 14
Regulation 14 of the Statutory Rules repealed Finance Regulations 94, 103 and 109. These regulations provided, respectively, that:-
• paid claims were to be returned to the Authorising Officer who originally authorised their payment;
• Paymasters were to pay all accounts by cheque drawn on a drawing account; and
• Paymasters were to verify the correctness of cheques drawn against the details of the accounts.
Regulations 94 and 109 have been repealed, in line with the Efficiency Scrutiny recommendation, since they impeded the full utilisation of computer-based systems.
Regulation 103 has been repealed because the former restriction is now unnecessary. Due to changes in systems it is now appropriate, in certain circumstances, for Paymasters to draw cheques directly on accounts other than drawing accounts.
Regulation 15
The amendment to Finance Regulation 127A is consequential upon those to Finance Regulations 4 and 6A.
Regulation 16
Regulation 16 of the Statutory Rules amends Finance Regulation 131 which required accounting officers and other persons dealing with the receipt and payment of moneys to keep copies of all the provisions of the Act, the regulations under the Act and the directions.
The requirement to hold all the provisions meant that officers held details of many provisions which had no relevance to their work. This was wasteful of resources and served no purpose. Accordingly, the amendment provides that only those provisions which are relevant to the duties in question need be held.
Regulation 17
Regulation 17 of these Statutory Rules amends Finance Regulation 133. That regulation provided that if an accounting officer or a person subject to the provisions of the Act committed any breach of the regulations the Minister for Finance could impose a penalty not exceeding ten dollars on that officer or person.
Subsection 71(4) of the Act provides that the regulations may impose a penalty not exceeding $500 on an accounting officer or other person subject to the Act for the breach of any regulation. Previously the limit was set at $10 but this was increased to $500 by an amendment to subsection 71(4) made by the Audit Amendment Act 1988.
The amendment to regulation 133 reflects that change.
Regulation 18
Regulation 18 of the Statutory Rules amends the Schedule to the Finance Regulations by omitting Forms 12, 12A, 16, 17, 24, 26, 28, 28A, 28B and 28C. The amendments are consequential to the amendments made in regulations 5 and 7 to 11 of these Statutory Rules.
ATTACHMENT B
AMENDMENTS TO THE FINANCE (OVERSEAS) REGULATIONS
Regulation 1
Regulation 1 of the Statutory Rules defines “Principal Regulations” as the Finance (Overseas) Regulations (the F(O)Rs).
Regulation 2
Regulation 2 of the Statutory Rules amends F(O)R 2 which defines various of the terms used in the F(O)Rs. The amendments to the definitions of “Department” and “Secretary” reflect the amendments made to those terms in Finance Regulation 4 as a consequence of the amendment of Finance Regulation 6A discussed under the heading “Regulation 2” on page 1 of Attachment A.
The amendment to the definition of “Overseas Certifying Officer” reflects the amendment to section 34. A consequential amendment has also been made to reflect in the definition the amendment to F(O)R 28 made in regulation 5 of these Statutory Rules.
Regulations 3 and 4
Regulations 3 and 4 of the Statutory Rules amend F(O)Rs 12 and 13; these are the overseas equivalents of Finance Regulations 45 and 45A. The amendments mirror those made to those Finance Regulations in the Finance Regulations (Amendment) and are made for the same reasons. (See headings “Regulation 3” and “Regulations 4 and 6” on pages 2 to 4 of Attachment A).
Regulation 5
Regulation 5 of the Statutory Rules amends paragraph 28(3)(b) of the F(O)Rs which provided for a person appointed by the Minister for Finance to certify, in writing, that a payment may properly be made. In line with the amendment to section 34, the paragraph now provides for such a person to indicate, in a manner approved by the Minister, that payment may properly be made.
Regulations 6, 7 and 8
Regulations 6, 7 and 8 of the Statutory Rules amend F(O)Rs 29, 31 and 33. Previously, each of these regulations included reference to the written certificates that Overseas Certifying Officers were required to give prior to the amendment of section 34 of the Act. The amendments reflect in these regulations the amendment to section 34 and that to paragraph 28(3)(b) made by regulation 5 of these Statutory Rules.